Recently, Alibaba stock (symbol BABA) closed at $115.10 a share, up $.26 on the day. Consider the following chart giving the premium as of close of trading on that day on various options on Alibaba shares. In the questions that follow, use the Last Sale column to answer questions which involve option pricing and show calculations:

a. What is the premium on the December, 115 call, i.e. the call option which expires on the third Friday of December, and has a strike price of $115?

b. How much would an investor who wanted to buy 1 contract of this option have had to spend (before considering any commission or fees)?

c. What is the formula for the intrinsic value of a call? What was the intrinsic value of the Dec. 118 call? Was this option in the money or out of the money? What was the time value of this option?

d. Was the Dec. 114 call in or out of the money? What was the intrinsic value of this option? What was the time value of this option?

e. What was the premium on the Dec. BABA 118 put? Was this option in or out of the money? What was the intrinsic value of this put? What is the time value?

f. What was the intrinsic value of the Dec. BABA 112 put? Was this option in or out of the money? What was the options time value?

BABA 115.10 +0.26 Bid 115.38 Ask 115.45 Size 2x11 Vol 29848790 (ALIBABA GROUP HOLDING LTD) Open Int Calls Net Bid AskVol Open Int Puts Net Bid Ask Vol Sale Sale BABA! 405L 1 1 0-E BABA1405L111-E BABA! 405L 1 1 2-E BABA1405L113-E BABA1405L114-E BABA1 405L11 5-E BABA 1 405L11 6-E BABA1405L117-E BABA! 405L11 8-E BABA1405L119-E BABA1405L120-E 03 -0.52 6.70 7.30 26 6.40 -0.25 6.10 6.70 36 5.86 -0.19 5.50 6.10 14 5.19 0.45 4.90 5.4035 4.75 -0.25 4.50 5.00 27 4.22 -0.48 4.10 4.40 201869 14 Dec 115.00 BABA1405X115-E 3.82 -0.91 3.70 4.00 11 3.49 -0.74 3.30 3.60 13228 14 Dec 117.00 BABA1405X117-E 3.05-1.53 2.95 3.20 1 3.20 0.0 2.45 2.90 0 2.42-0.322.30 2.60 776 2543 14 Dec 120.00 BABA1 405x120-E 909 14 Dec 110.00 BABA1405X110-E 42 14 Dec 111.00 BABA1 405x111-E 298 14 Dec 112.00 BABA1405X112-E 63 14 Dec 113.00 BABA1 405x113-E 256 14 Dec 114.00 BABA! 405X114-E 2.12 +0.261.95 2.205195 2.64 0.0 2.30 2.600 2.78 0.0 2.70 3.000 3.83 +0.33 3.10 3.701 3.88 +0.07 3.60 4.10 20 4.46 +0.16 4.10 4.70 53352 5.24 +0.79 4.60 5.4010 5.76 +1.26 5.20 6.0011 5.20 0.0 5.90 6.70 0 5.12 0.0 6.50 7.40 0 5.80 0.0 7.20 8.000 54 122 39 169 27 95 54 326 14 Dec 116.00 BABA1 405x116-E 196 14 Dec 118.00 BABA1405X118-E 361 14 Dec 119.00 BABA1405X119-E 106